Tax & Rounding

Much of the information contained in the Tax & Rounding details is provided in the form for the most commonly used values. However, the information provided should be reviewed to ensure it meets your particular requirements.

Prerequisites

  • No prerequisites

Rules and Guidelines

  • Fill in the mandatory fields.
  • This screen can be set to Auto Calculate A/D Lots. Zero A/D Lots mean there is nothing payable on the A/D but if the A/D Lots are not = '1' and not = '0' either, no proration will be performed.

Field Information

This value is used in the formula for checking the reasonable amount of each employee's pay.

Example:

  • If the field is set at 1.50, the system would compare the actual gross pay with one and a half times the theoretical calculated value.
  • If the actual gross exceeds the theoretical value, the employee's pay is reported for verification.
  • The system also assumes that more than one pay period is involved and applies tax, additions and deductions according to the $value of the generated pay.
  • The formula used in the calculation is :-

Employee Base Hours x Pay Frequency x Base Pay Rate x Gross Value Check Factor = Calculated Gross

This field is only relevant for pay envelopes and cash payments. Enter a value that the employee's net pay will be rounded to.

Example:

0.10 is entered to rounded to the nearest 10 cents.

If a value is entered into the Net Round Value field, specify where the rounding amount is to be placed.

Code Description
N Puts the rounding amount goes into the employee's tax.
 

Example:

Net Rounding Value: 1.00
Before Rounding:
Employee net pay : $251.49
Employee net tax : $48.25
After rounding:
Employee net pay: $251.00
Employee net tax: $48.74
D Rounding down the net pay amount into a field on the employee's Master File record where it is carried forward to the next pay.
Each employee's net pay is rounded down. The rounding amount is held in the employee's YTD Gross Tax Net window to be added to the next Payrun. Using the above example, the 49 cents would be added to the employee's net pay, in the next Payrun, before being rounded off.
U Rounding up the net pay amount into a field on the employee's Master File record, where it is carried forward to the next pay.
Each employees net pay is rounded up. The rounding amount goes into the employee's YTD Gross Tax Net window to be deducted from the next pay.
  • If rounding is not required, an N is entered.

 

Enter the normal company working hours per week. This value is used only if the system cannot find the base hours for an employee.

Indicate if the system should automatically calculate the number of weeks the employee's pay is to be taxed.

Code Description
H

Calculate Tax Weeks for New Hires/ Terminations/ Transfers.

Tax Weeks are calculated by Length of Service, using the structure of the Employee's Work Pattern or Base Hours Code. For example, if an employee is hired part way through a Fortnightly payrun, the system will calculate the Work Hours from Hire Date to Period End Date, and divide this by the total Work Hours in the Pay Period, and then multiply this result by the standard Tax Weeks for the Pay Frequency. When the Hire Date is in the previous period and the employee has not yet been paid, this same calculation will be performed for the previous period and added to the standard Tax Weeks for the current Period.
N The system automatically calculates the number of weeks to be taxed based on the pay frequency.
Y

Automatically calculate the number of weeks each employee's pay is to be taxed.
The system automatically calculates the number of weeks to be taxed for each employee. This is done by dividing the number of hours being paid by the employee's base hours. However, Hours Types flagged for exclusion from tax calculations are not included in this calculations.

Tax weeks are calculated to four decimal places for employees who are paid monthly or half monthly. The minimum number of tax weeks used is one week.

Where the calculation results in a part week and is greater than 1, the system rounds down when the part week is less than .5, and up when it is equal to or greater than .5, 1.4 becomes one week and 1.5 becomes two weeks.
  • With both values, the calculation can be overridden in the Payrun by entering the number of weeks on the employee's pay transaction.
  • Note that options Y and H will not be applied to any employee with an Employment Type of C (Casual) or E (External).

 

Will the system automatically calculate the number of allowance/deduction lots to be paid or taken for each employee?

Code Description
N Does not automatically calculate the number of Allowance/Deduction Lots to be paid or taken by each employee.
The system does not automatically calculate the number of Allowance/Deduction lots. The standard amounts specified in the Employee Salary window are used.
Y

Automatically calculate the number of Allowance/Deduction Lots to be paid or taken by each employee.
The system automatically calculates the number of Allowance/Deduction lots to be paid or taken for each employee.

As the Allowance/Deduction Amounts are per pay period and not necessarily weekly, the calculation of the number of lots to be taken is-

...........................Hours................................... = Deduction Lots

Employee Base Hours x Pay Frequency

  • Casual employees are always 1 unless overridden in the Payrun.

 

 A value that the employees net pay will be rounded if paid by cheque.

Example:

0.10 is entered to rounded to the nearest 10 cents.

A value that the employees net pay will be rounded if paid via a bank credit.

Example:

0.10 is entered to rounded to the nearest 10 cents.

This field stores the weekly value of the Protected Earnings Amount (PEA). Generally obtain the value from TAPS or the ATO website and you may receive advise on the AU Legislation Bulletin if the value is announced early enough.

When using Method A, the amount of tax to be withheld from an additional payment is limited to a maximum of 47% of the additional payment. If the withholding amount calculated using Method A exceeds 47% of the additional payment being made, then the amount is reduced to 47% of that payment. Schedule 5 Tax Table for back payments commissions bonuses and similar payments.

This field will be displayed when Program Control PAY42 Position 19 is set to Y.

This is where the low-income minor weekly threshold can be maintained and be used in the Calculate Payrun Process.

This is the tax rate that the Lump Sum A portion of a termination pay is taxed. Schedule 7 Tax Table for unused leave payments on termination of employment.

The value entered cannot be overridden during the Time Card Entry.

This is the percentage of Lump Sum B that is to be taxed at the same rate as Lump Sum A. Schedule 7 Tax Table for unused leave payments on termination of employment.

The value entered here cannot be overridden during the Time Card Entry.

Lump Sum A Tax Rate 32%
Lump Sum B Payout $1,000
Portion of Lump Sum B taxed at Lump Sum A Rate of 5.00%
5% of $1,000 taxed at 32% = $16

 

This is the percentage of Lump Sum W that is to be taxed.

The value entered cannot be overridden during the Time Card Entry.

This relates to unused leave post August 1993. Schedule 7 Tax Table for unused leave payments on termination of employment.

It is used for specifying the flat tax rate for unused post August 1993 Annual and Long Service Leave of $300 or less.

This relates to the unused Annual and Long Service Leave post August 1993.

  • Depending on the total value of the unused post August 1993 leave, tax may be calculated at a flat rate or at a marginal rate.
  • Unused Annual and Long Service Leave to the value of $300 or less is taxed at a flat rate.
  • Unused Annual and Long Service Leave over $300 is taxed at the marginal rate.

 

Unused Annual and Long Service Leave over $300 is taxed at a marginal rate. In this case, a typical Gross Pay is required.

Code Description
Blank (Default) Calculate normal gross using last pay only.
The last pay is used as the typical Gross pay. This option is useful if employee's pays generally remain unchanged.
A Calculate normal gross using average since the start of the financial year.
An average Gross Pay amount is calculated over the financial year the employee is being terminated. This is calculated by dividing the total Gross by the number of tax weeks. Preceda uses the employee's earnings history. This option is useful if employee's pays vary from Payrun to Payrun.